Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.6%) and Nasdaq Composite (+0.8%) are setting fresh record highs as tech stocks rebound from recent weakness, while some softness in the broader market keeps the DJIA (+0.1%) near its baseline.

Stocks opened to relatively broad weakness amid reports that the U.S. and Iran exchanged military strikes. Crude oil moved more than 3% higher this morning and Treasury yields were higher across the curve.

Less than an hour into the session, Axios reported that U.S. and Iranian negotiators reached an agreement on a 60-day memorandum of understanding to extend the ceasefire and begin negotiations over Iran's nuclear program, though the deal still awaits President Trump's approval. Crude oil retreated, currently down $0.37 (-0.4%) to $88.31 per barrel, while yields are now modestly lower across the curve.

The top-weighted information technology sector (+1.4%) made a sharp move higher, which has paced the index-level gains.

Software stocks were already off to a solid start, boosted by a blowout earnings report from Snowflake (SNOW 239.76, +64.50, +36.80%). Additionally, Microsoft (MSFT 424.31, +11.64, +2.82%) is a mega-cap standout after The Information reported that the company will soon unveil a new AI-powered coding framework, and the iShares GS Software ETF is up 2.6%.

A reversal from early weakness across semiconductor names pushed the sector firmly higher, with the PHLX Semiconductor Index now up 1.9% as names such as First Solar (FSLR 305.12, +31.45, +11.49%) and Super Micro Computer (SMCI 42.29, +4.10, +10.74%) post double-digit gains.

Outside of the technology sector, the health care sector (+1.3%) also outperforms, led by Agilent (A 136.16, +20.32, +17.54%) after the company topped earnings estimates.

Gains are more modest elsewhere, with six total S&P 500 sectors trading higher.

The intraday reversal in oil prices helped several cyclical sectors recover from pronounced early weakness, with no S&P 500 sectors currently holding a loss wider than 0.4%.

There are several notable stock-specific moves in the fold after the latest batch of earnings reports, with retailer names such as Best Buy (BBY 76.68, +12.14, +18.82%), Dollar Tree (DLTR 113.07, +17.20, +17.94%), and Kohl's (KSS 15.26, +2.34, +18.10%) trading sharply higher.

Overall, the sharp reversal in oil prices helped flip sentiment decisively to the upside after a weak open tied to geopolitical concerns. At the same time, investors once again showed a willingness to buy dips across semiconductor and AI-linked names following recent profit-taking, helping push the major averages to fresh record highs.

Reviewing today's data:

• Personal income for April decreased slightly, resulting in an unchanged month-over-month reading (Briefing.com consensus 0.5%) after a revised 0.5% increase (from 0.6%) in March. Personal spending rose 0.5% month-over-month (Briefing.com consensus 0.4%) following a revised 1.0% increase (from 0.9%) in March. The PCE Price Index increased 0.4% month-over-month (Briefing.com consensus 0.5%), leaving it up 3.8% yr/yr versus 3.5% in March. The core PCE Price Index rose 0.2% (Briefing.com consensus 0.3%), leaving it up 3.3% yr/yr versus 3.2% in March.
  
  • The key takeaway from the report is that the lack of income growth combined with an acceleration in the year-over-year core PCE Price Index (to 3.3% from 3.2%) will invite stagflationary concerns, especially if this dynamic continues in the following months.
• The second estimate of Q1 GDP showed a downward revision to an annual rate of 1.6% (Briefing.com consensus 2.0%) from 2.0% in the advance estimate. The GDP Chain Deflator was revised down to 3.5% (Briefing.com consensus 4.5%) from 3.6% in the advance estimate.
  
  • The key takeaway from the report is that investment and consumer spending in Q1 were weaker than previously estimated while government spending and the impact of trade were essentially unchanged from the advance estimate.
• Initial jobless claims for the week ending May 23 increased by 5,000 to 215,000 (Briefing.com consensus 214,000) from last week's revised reading of 210,000 (from 209,000), while continuing jobless claims for the week ending May 16 rose to 1.786 million from a revised 1.771 million (from 1.782 million) in the prior week.
  
  • The key takeaway from the report is that even with this increase in initial and continuing claims, the overall level of jobless claims remains relatively low.
• Durable goods orders surged 7.9% month-over-month in April (Briefing.com consensus 1.7%) after increasing a revised 1.1% (from 0.8%) in March. Excluding transportation, orders were up 1.1% month-over-month (Briefing.com consensus 0.5%) following an upwardly revised 1.1% increase (from 0.9%) in March.
  
  • The key takeaway from the report is that a big increase in aircraft orders from Boeing (BA) fueled the headline increase while nondefense capital goods orders excluding aircraft decreased 1.1%, reflecting some newfound softness in business spending.
• New home sales decreased 6.2% month-over-month in April to a seasonally adjusted annual rate of 622,000 from a revised 663,000 (from 682,000) in March. On a year-over-year basis, new home sales were down 11.3%.
  
  • The key takeaway from the report is that the median sales price increased even though the supply (9.4 months) of homes approached this year's high (9.9) from January.